How enterprise architects can help ensure success with digital transformations

McKinsey Q

Here is a brief excerpt from an article written by Oliver Bossert and Jürgen Laartz for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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Those who design and steer the development of the technology landscape can mitigate risk by setting operating standards and promoting cross-functional collaboration.

Most CEOs understand the potential upside of a digital transformation. If they can get it right, their companies can be more efficient, more agile, and better able to deliver innovative products and services to customers and partners through multiple channels. About 70 percent of executives say that over the next three years, they expect digital trends and initiatives to create greater top-line revenues for their businesses, as well as increased profitability.

There are tangible risks associated with these efforts, however. Traditional companies want to behave like start-ups, but they usually don’t have the technology infrastructures or operating models to keep up with companies that have been digital from the start. Their shortcomings can have consequences. Traditional companies undergoing digital transformations may continue to build ever-more-complicated IT systems, deploying new features or patches and fixes on the fly to meet immediate needs without any clear road map or consideration of future IT needs.

Indeed, an in-depth survey we conducted with Henley Business School on enterprise-architecture management revealed such patterns among companies pursuing digital transformations (see sidebar, “The Enterprise Architecture Survey”). When companies go all in on digitization, the number of point-to-point connections among systems rises almost 50 percent, the quality of business-process documentation deteriorates, and services get reused less often (Exhibit 1).

These firms experience greater complexity in systems and processes—and not just in the near term, as digital projects are rolled out, but also in the long term, as companies seek to extend pilot programs and applications to all functions and business units. In the latter scenario, IT organizations may need to do a lot of systems and applications rework and reengineering to enable even the most basic digital activities. Companies may be slower to market with new products and services, and less able to react quickly to changing customer demand.

The enterprise-architecture (EA) department can play a central role in reducing the complexity associated with digital transformations. Most companies have a dedicated EA group embedded within the larger IT organization. This group typically oversees the entire systems architecture, including business processes and IT infrastructure. It helps to establish rules for and processes around technology usage to ensure consistency across business units and functions. As such, this group can help the CEO and others on the senior leadership team redesign their companies’ business and IT architectures so that they can avoid some of the pitfalls cited earlier and compete more effectively in a digital era.

The findings from our research suggest that when the EA group is directly involved in digital-transformation projects, the documentation and communication between business and IT stakeholders improves significantly. What’s more, organizations are likelier to focus on capturing tangible benefits from the transformation—an important factor in mitigating the risk of black swans2—and to devote more time and attention to planning. They may also be able to launch products and services more frequently, given the reduced complexity.

Most companies are not prepared for this to happen, however. More than 40 percent of respondents in our survey say that the business leaders in their companies are not aware of what the EA group does. We believe that to improve the odds that a digital transformation will succeed, CEOs and CIOs need to raise the profile of enterprise-architecture departments within their companies and to develop the business and interpersonal capabilities of their enterprise architects.

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Here is a direct link to the complete article.

Oliver Bossert is a senior expert in McKinsey’s Frankfurt office, and Jürgen Laartz is a senior partner in the Berlin office.

The authors wish to thank Sharm Manwani, executive professor of IT leadership and director of the Strategy & Enterprise Architecture Programme at Henley Business School, for his contributions to this article.

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